5 Interesting Facts About Customer Loyalty MarketingNov 20, 2015 - by Tracy McAllister
Where do you begin when it comes to formulating your marketing strategy? Well, the fact that it can be up to 5x more cost effective to retain an existing customer than to acquire a new one is a hint. But, ultimately only 16% of companies focus on customer retention and loyalty. Don’t believe us? Check out the article below!
Discover more best practices and strategies leading edge marketers are adopting and adapting to increase revenue today, and for the long-term, in our Modern Marketer’s Guide to Increasing Purchase Conversion.
Customer loyalty marketing, which is the strategic promotion and management of existing customers loyalty towards a brand using incentives, easily is one of the most efficient and cost-effective forms of marketing.
Efficient because it allows you to target a segment you already have sufficient knowledge about – your existing customers. Since you’ve already monitored their motivations, pain points, buying behavior and purchase history, you can fine-tune your approach by backing it against empirical data.
Cost-effective because it allows you to retain customers, which is the holy grail of customer-centric marketing. The cost-effectiveness becomes clearer when you note that a) customer retention is cheaper than new customer acquisition, and b) retained customers are more profitable than new customers. (Loyal customers have not only a higher lifetime value, but also greater average spending per purchase.)
Thus, with customer loyalty marketing, you can target quality customers with high-precision, increase your average order size/order amount and boost your bottom line. And that’s not even the best part!
What’s wonderful is that loyalty breeds loyalty! Loyal customers go out to spread the word about you, bringing-in other like-minded prospects and turning them into referred customers for your business.
Five facts about customer loyalty marketing you probably didn’t know
Impressive, thought-provoking and some, outright fascinating – here are five facts about customer loyalty marketing that will impress you further.
1. Customer loyalty marketing is driving revenue for you
The great philosopher and economist Vilfredo Pareto discovered that income is distributed in what we now know as the Pareto distribution. Guess what? Your revenue is distributed similarly. Fitting into the Pareto principle, 80 percent of your revenue is generated by the 20 percent of your customers that are loyal. Customer loyalty and subsequent retention have in fact, been cited by 70 percent of service businesses as a critical factor of business growth.
2. Customer loyalty programs can turn the apathetic into the loyal
Loyalty is a complex function of product and brand experience. But you probably already know that. However, do you know that a loyalty program can create loyalty for your brand?
80 percent of the 3,162 respondents of a loyalty study said they were more likely to do business with vendors that offered a loyalty program of some sort. What’s fascinating is that 29 percent of the 6000+ respondents of another survey The Loyalty Report (2014) said they would not have been loyal to a brand if not for its loyalty program.
3. Content is the king, even in customer loyalty marketing
The Loyalty Report 2014 also found that relevant brand communication in customer loyalty marketing boosts satisfaction significantly. Loyalty-program members who found communication to be relevant were 4.6 times more happy and satisfied with the brand than those who found the communication otherwise.
4. Go mobile or go home
72 percent of respondents from The-Loyalty-Report survey spoke of mobile devices being a preferred medium of communicating with brands. Millennials are in fact, expecting brands to shift their loyalty marketing on the mobile. In addition, 59 percent respondents from the loyalty study said dedicated apps for the loyalty program made them “much more likely” or “very likely” to become a member.
5. Perks matter, social rewards not so much
The loyalty study found 57.4 percent customers joined loyalty programs to save money and 37.5 percent to receive rewards. A majority (36.8 percent) spoke in favor of the tried-and-tested loyalty-program method, card-based programs and 33.3 percent favoured digital programs.
The Loyalty Report says discounts and perks such as distinguished events, status, access or experiences are the desired rewards customers expect for their loyalty. In a world that’s increasingly becoming social, it is interesting to note however that social rewards have no positive influence on the motivations of customers for joining loyalty programs.
The loyalty study found 43.8 percent customers said social rewards made them “less likely” to join a loyalty program. Another 39.5 percent said such rewards made them “much less likely” to join! For the time being, sticking to card-based programs while venturing into digital programs seems a safe alternative therefore.
This article is by Tracy McAllister from mcallistermarketing.com.